Investing in commercial real estate represents a wide range of investment factors which are unique to each transaction. Beyond the financial modeling of the investment returns, how the owner decides how to hire vendors, how to spend due diligence funds, and ultimately how they manage the asset will determine whether any particular property has met their goals. The most important factors for any real estate deal are the following:
- Investor Goals
- Investor Experience
- Type of Property
- Financing/Capital Stack available
- Need for creative solutions
The first step is to understand your own goals for acquiring the property. For example, an investor purchasing core property with near full occupancy at market rates, is willing to pay a lower cap rate (higher income multiple) for real estate investments and is more sensitive to interest rates on borrowed funds. On the other extreme, a value-add investor will exit the property sooner than a core buyer and will be less sensitive to costs of borrowing and more interested in purchasing “at a discount.” In this same vein, different investors will place different emphasis on different parts of the legal process: Letter of Intent, Purchase and Sale Agreement, due diligence review, financing obligations, seller representations and warranties, and ultimate legal management of operations. Ronald Rohde Law is focused on understanding what each investor needs and then prioritizing those needs above others. Whether it’s cost of legal services, responsiveness during critical periods, or education and being sure the client understands each step of the process.